WHY FOR-PROFIT COMPANIES WILL DO THE RIGHT THING
Several years ago, Socially Responsible Investing maven Peter D. Kinder, then president at KLD Research & Analytics (KLD) in Boston, and currently Strategic Advisor to ESG Analytics, wrote a white paper called “Values and Money.”
His stated goal was to trace the history of SRI and to provide some real definitions, context and metrics about investing with a socially or environmentally conscious agenda. He wrote:
SRI emerged in the 1960s from two intertwined, but distinct motivations.
First, it sprang from a desire to change the way corporations interacted with and affected society. This impulse found expression largely through shareholder activism in support of political efforts. The first shareholder action (1967) focused on Eastman Kodak’s minority hiring practices.
Second, it arose from a desire among investors to have their investments be consistent with their ethics. The Pax World Fund (1969) allowed investors to avoid military stocks at the time of Viet Nam.
I think we’re now seeing a third factor surfaciing: Consumers, investors, shareholders are more and more willing to vote with their dollars and to hold corporate boards accountable, just as donors are holding nonprofits accountable. Google and Bill Gates and all the social venture capital partners out there now are backing for-profit companies that seek to do good by doing well because they believe it’s a smarter model for social transformation. And while there are pros and cons to such widespread adoption of for-profit social giving, it certainly does do away with the constant need to fundraise and therefore keeps the focus on the mission. (I’ll look at some of the cons in another blog.)
As a result, boards and CEOs at big, global and established corporations will find themselves hard-pressed to ignore the profile, the purpose and, best of all, the sustainable profits that flow from such socially conscious enterprises. In order to continue to build their companies and attract shareholders and preserve both the planet and their future, they will ultimately be bound to follow the SRI model. They will need to match their operations to socially conscious values. And we, the shareholders and consumers, will win.
Or, as Ivan Seidenberg, chairman and CEO of Verizon, puts it in a just-released report about the coming society challenges from the Committee Encouraging Effective Philanthropy (which boasts Paul Newman as a founder): “Our belief is that corporate philanthropy expands the business. If you do the right thing over time, you expand the capabilities of your customer base, business, and society.”